U.S. stocks ended May with their best returns since February, though gains were muted as economic data stirred concerns about the strength of the nation's recovery. Prospects remain for an interest rate hike later this year. The S&P 500 ended May with its first weekly decline, slipping 0.84%. This after reports indicated that first quarter GDP growth was downwardly revised, into negative territory, while consumer sentiment fell the most since late 2012. Economists expect current-quarter growth to rebound amid a brighter outlook on corporate profits, an inclining trend in business investment, and heightened merger activity. In retrospect, the economy had been hampered by harsh winter weather, delays at ports, and strong dollar-induced trade imbalances. The Dow Jones Industrial Average rose 1.35% in May and is up 2.14% YTD, while the NASDAQ Composite, to date, returned 2.76% on the month, up 7.57% YTD. All three major U.S. equity indices set fresh record highs in May.

Eight of the ten major S&P 500 sectors advanced on the month, led by Healthcare (+4.53%), Technology (+2.31%) and Financials (+1.84%). Energy (-4.76%) and Telecom (-1.77%) lagged. For 2015 overall, Healthcare (+9.86%) and Consumer Discretionary (+6.14%) are the top performers, while Utilities (-4.97%) and Energy (-1.33%) have lagged the most.

Small-cap stocks, as measured by the Russell 2000 Index, advanced 2.28% to outperform their mid and large-cap counterparts, in May. Mid-cap stocks rose 1.46%, as measured by the Russell Mid Cap Index. YTD, small and mid-caps are up 3.98% and 4.52% respectively. Growth stocks reasserted leadership over value with the Russell 1000 Growth Index rising 1.41% in May. Meanwhile the Russell 1000 Value Index gained 1.20%. The Russell 1000 Growth Index is up 5.83% thus far this year, outperforming the 1.41% return of the Russell 1000 Value Index.

The MSCI EAFE Index, a broad measure of 21 global developed markets outside of the U.S. and Canada, declined 0.51% in May, ending four straight months of outperformance over domestic stocks. The EAFE still leads on a YTD basis, up 8.60% year to date. The MSCI Emerging Markets Index also underperformed the U.S. in May, retreating 4% and trimming its YTD gain to 5.69%.

Treasuries, as measured by the Barclays U.S. Government Bond Index, fell 0.16% in May, paring its YTD return to 0.93%. The yield on 10-year U.S. Treasury notes rose by seven basis points to end May with a 2.12% yield.

U.S. investment grade corporate, government and agency-backed bonds, as measured by the Barclays U.S. Aggregate Bond Index, declined 0.24% last month, trimming the benchmark bond index to a YTD gain of 1%. The Barclays U.S. Corporate High Yield Index, a proxy for below-investment grade corporate bonds, continued to post gains, albeit just 0.30%, adding to its YTD gain to 4.07%. The Barclays Municipal Bond Index fell 0.28%, cutting its YTD gain to 0.21%.

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